A Value-based Client-firm Relationship
The Challenge: Building a new (or even improving upon an existing) client-firm relationship is never easy, especially in the fast-paced, high pressure world of sophisticated corporate legal practice. Add to that the weight felt by so many firms and departments to evolve to a higher form of practice and cost management, and companies’ increasing attention on measuring results associated with the legal spend, and you’ve got a lot of people involved who are grappling with all kinds of problems -- from establishing metrics, to choosing appropriate staffing and outsourcers, to change management problems with your staff, to managing up and doing more with less. Setting the Stage: So what should you do? And more importantly, how do you do it? Do the risks of changing outweigh the potential rewards? ACC and our Value Challenge steering committee believe that maybe the ability to literally “see” how it’s done will help you reassess whether or not value-based change really is too risky. So we’re offering a real-time case study for everyone out there struggling to find a path that works; kind of like “legal reality TV.” A Forum to Learn, Benchmark & Comment: Below is the inaugural post of an in-motion case study that allows you to judge the promise and pitfalls of forming a new value-based client-firm relationship . . . one that isn’t built along traditional lines. And the best part is this project will be done in the bright light of day via our In-House ACCess blog, rather than behind the curtain. While it’s the parties in this relationship who have skin in the game to get it right, we’ll be looking for you to comment as well as observe, by sharing your questions, reactions, sidebars, relevant experiences and more. But no, you won’t be able to vote them off the Island and there is no elimination round: this is TRUE reality relationship building. The gripping tension here is that the stakes are real and the parties don’t just get to walk away with a consolation prize if it doesn’t work; they have to make it work. What we’ll watch unfold is what we all have to do: figure out how to drive the right results for the right price with the right staffing and succeed based on whatever expectations are established at the outset. The Show Will Go On: This project will be openly chronicled on this blog over the coming weeks and months, so stay tuned and join the community by engaging in this first and in future posts. The Leads: Our “players” are not Thespians, but real folks who are actually crafting this relationship and trying out their ideas for new value-based models of working together. ACC owes its thanks to the open and visionary nature of ACC Value Challenge steering committee member Ken Grady, who offered to profile his selection and start-up process of working as General Counsel and Secretary at Wolverine World Wide with law firm Seyfarth Shaw. We owe our gratitude to Seyfarth, as well: not many firms would be “out there” – exposed in the transparent fashion. We’ll all be watching as both Ken and Seyfarth figure out how to make it work. The project they’ve selected is a new approach to managing a large trademark portfolio. Each week or so, you’ll see twin posts from both Ken and Seyfarth, chronicling the progress and challenges of their evolving relationship. And we’ll be linking in lots of relevant content and other experiences from the ACC Value Challenge and our resource pages at www.acc.com/valuechallenge. Lifting the Curtain: The goal of this effort, as one of the bloggers notes below, is to ‘lift the curtain’ in order to help you assess how you can earn from this example and apply value-based practical solutions. Join in: Please be sure to join in the conversation with your comments and observations, and enjoy. Susan Hackett, Senior VP and General Counsel, Association of Corporate Counsel and the ACC Value Challenge (hackett@acc.com) The Client’s Situation Blogger Ken Grady is general counsel at Wolverine World Wide, Inc. Over 3,600 trademarks, 800 domain names, 180 countries and territories, and 10 major footwear and apparel brands, Wolverine World Wide, Inc. is the company you may not know with the brands (we hope) you love: Hush Puppies, Merrell, Sebago, Wolverine, Cushe, Chaco, and so on. Midwest born and bred for 127 years, today we have a global, publicly held, $1.2 billion, very complex business model. Handling the legal side is our small Legal Department: four attorneys (including me, Ken Grady, the General Counsel and Secretary) and four paralegals. Eighteen months ago, we (the Legal Department) set a goal of moving our trademark portfolio from a traditional service and management structure to something better. About 30% of our annual outside counsel spend goes toward trademarks. To make life interesting, we threw on the constraints: no dedicated in-house trademark attorney or paralegal, an efficient operation that keeps our costs low as our portfolio grows, a strong culture fit between the company and our outside firm, and a dynamic and constantly improving portfolio services and management model. A key question was the law firm. Moving from our existing outside counsel would put a heavy burden on our team and introduce some risks. Staying with the current firm eased the burden, but also had risks and potential downsides. We decided to start by satisfying the Greek aphorism "know thyself." Twelve months later, we were talking to law firms. Actually, it wasn’t quite that straightforward. We started by drafting an RFP. The more we gathered information about ourselves and potential law firm partners for the RFP, the more we realized that our keys to success were really understanding what we wanted and being very open when talking to potential firms. We decided the RFP process was a good way to learn about ourselves and what we wanted, but probably not the best way to evaluate potential law firm partners. While 12 months may seem like a long time, we are small and had a few other things to handle (there was this global economic crisis thing). Much of the information had not been gathered before and there were two of us working on this very part-time, but this was a major project so it was worth investing the time. We pulled together quantitative and qualitative information. We focused on understanding what our client needed from the portfolio, and what we needed as the Legal Department to meet our client's needs. What became clear over the 12 months was that we needed something other than just a solid trademark practice. We needed a firm that would bring a new approach, an open mind, willingness to experiment, and a value orientation to structuring the financial side of the deal. In the next post: How do you choose a law firm without talking about fees (and are you out of your mind)? The Firm’s Story Blogger Lisa Damon is a member of the Executive Committee at Seyfarth Shaw, and has been leading the firm’s efforts to incorporate Lean Six Sigma into its business. Our story starts back in 2005, when things were good in the law firm world. Years of history across the industry allowed firms across the country to raise rates every year, pay associates in lock step and increase revenues. But there were signs of change, even in 2005 when we started – change that has only escalated with time. But, I’m getting ahead of myself. First, a word of introduction: Seyfarth (we say “Si - farth,” but answer to most anything) is a large, full-service firm, with 10 offices nationally. We have about 750 lawyers and are known for our culture and client service. That is important as you get to know us, and provides a context that will help you understand how some of the things you’ll read about in this blog came to be. We are a “metal desk” culture -- low on frills and high on value. Turns out that our cultural underpinnings were (and are) vital to where we are now . More on that later. At the time we started down the road that eventually lead us to Lean Six Sigma, our biggest clients were increasingly talking of flat fees and alternative billing. We provided numbers, but realized that the numbers were really based on assumptions and the little historical data that we could put together. Seyfarth made a decision to take a different route. We wanted to understand our own internal processes – to figure out how we actually practiced law and then make it better and more efficient. Said simply, we knew we had to learn how we could work differently to increase value and quality to clients and provide lower, predictable cost. Since then, we have been on a journey to better understand and consistently deliver real client value: to learn the art of putting our own interest as a law firm aside and concentrating first on our client’s interest -- knowing that the firm would benefit in the end, if we did it right and true. As we will talk about in later posts, we adapted the principles of Lean Six Sigma (which we call SeyfarthLean) and began the journey. That road led us many places – from the ACC Value Challenge to many client relationships and now to Ken Grady and Wolverine. This blog will trace our new and evolving relationship with Wolverine – through thick and thin; establishing project management teams, setting rates, transitioning files, grappling with joys and problems – everything that is part of a client/law firm relationship. We hope by lifting up our curtain, we will help others to grapple with the “how” and “why” of changing the way we work together to serve our collective clients. None of us have it all right and at Seyfarth we are firmly in the midst of the journey but we thought sharing might help. Please post your thoughts and comments as we go forward. In the next post: • Lean Six Sigma in three painless sentences; and, • What do you mean you agreed to represent Wolverine and never talked about fees (are you out of your mind)?
These exchanges are indicative of evolutionary change - which will occur one day. For now, most 'alternative' billing strategies are not accepted, except by a very small number of clients.
Even when experience shows that the alternative would have cost the company less in the long run, the next proposal is still declined.
Alternative billing must not mesh with the budget protocols of publicly-traded companies. In those where the GC has a large enough budget, the GC may just take the chance that an alternative approach will be beneficial. Otherwise, it occurs less often than it should.
Another factor is that companies are not in the business of trying to reap money through litigation. Sure, they want to recoup or stop damages, but that's just a reaction to management screaming 'do something about what we're losing.' Once the business exigency is addressed, then a corporation would just as soon forget the suit and move on. This tends to preempt arrangements where the attorneys work for less in exchange for sharing in a successful outcome.